TMI Blog2012 (10) TMI 1214X X X X Extracts X X X X X X X X Extracts X X X X ..... cing the land to be in its own name. 2. On the facts and in the circumstances of the case, the Commissioner of Income tax (Appeals), Kolhapur erred in not appreciating that to claim exemption as per section 2(1A) of the Act, the basic condition is that the assessee should be cultivator, or receiver of rent in kind, of any process to render the produce raised or received by him fit to be taken to market. The assessee satisfies neither of the above conditions, since being an artificial person, created by law, it cannot be an agriculturist , conduct any of the above activities of its own. 3. The appellant prays that the order of the Commissioner of Income tax (Appeals), Kolhapur be vacated and that of the Assessing Officer be restored. 3. The Assessing Officer disallowed the claim of the assessee with regard to agricultural income mainly in absence of non-filing of extracts in form 7/12 and 18 with regard to the agricultural land in question. In appeal, the CIT(A) has allowed assessee's claim, which has been opposed before us. 4. The Ld. Departmental Representative submitted that the CIT(A) failed to appreciate that to claim exemption as per section 2( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 2(2) defines an assessee to mean a person by whom agricultural income-tax or any other sum of money is payable under the Maharashtra Agricultural Income-tax Act, 1962. 6. Sub-section (9) of section 2 defines the meaning of a person appearing in sub-section (2). Sub-section (9) reads as under: (2) person includes- (a) an individual (b) a Hindu undivided family, (c) a company, (d) a firm, (e) an association of persons or a body of individuals, whether incorporated or not, and (f) every artificial juridical person, not falling within any of the preceding sub-clauses; Item (d) of this sub-section specifically includes a firm. Thereby implying that a firm can have agricultural income on which agricultural income-tax is payable. 7. Sub-section 7 to section 2 of Maharashtra Agricultural Income-tax Act, 1962 defines the terms 'firm', 'partner' and 'partnership' to have the same meaning as assigned to them in the Indian Partnership Act, 1932. Sub-section 7 reads as under: (7) firm , partner and partnership have the same meanings respectively assigned to them in the Indian Partne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ural labour. Explanation VI to section 60(1) of the of the Civil Procedure Code 1908 mentions that an agriculturist will be deemed to cultivate the land personally if he cultivates the land by his own labour or by the labour of any member of his family or by servants or by labourers by wages payable in cash or in kind (not being a share of produce) or both. Thus, it is immaterial that the firm cannot cultivate the land personally to become an agriculturist. All that is required is that the revenue from the land should be generated by agricultural produce. The deemed cultivation of land, contained in Explanation VI makes it amply clear that a person need not cultivate the land personally to be an agriculturist under the BTALA, 1948. Further, under section 2(1A) of the Income-tax Act only agricultural income is defined and is required to be a source of income. It is not necessary that in order to come within the ambit of the Income-tax Act, the person has to be an agriculturist. It is sufficient if revenue is derived from agricultural activities conducted on a land situated in India which is used for agricultural purposes. Therefore, the CIT(A) was justified in holding that the firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the only partners of the firm. In fact, as per the terms of the joint cultivation agreement, there cannot be any doubt that the assessee farm was obligated to carry out all agricultural operations in the farm land and to carry out all incidental activities in relation to farming operations. This has been clearly brought out in paragraph 2 of the joint cultivation agreement which is reproduced as under: In the Joint Cultivation the contributions and obligations of the two parties shall be as follows: (i) The contribution of MSFC shall be in terms of its cultivable land admeasuring about 647 acres of its Kolhapur Farm and other capital assets, such as buildings, machinery, etc. and permanent employees of the Kolhapur farm, and expert supervision of the management of the MSFC. (ii) The contribution and obligation of the firm shall include all operational activities in the farm lands including all input expenses, incremental staff/labour (if found necessary), establishment and office expenditure of Kolhapur Farm Office, repair and maintenance of MSFC machinery and any other expenditure incidental to the farming operations. Some persons are also deemed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, or occupied by the cultivator or the receiver of rent-in-kind, of any land with respect to which, or the produce of which, any process mentioned in paragraphs (ii) and (iii) of sub-clause (b) is carried on; 17. Clause (a) specifically states that agricultural income means any rent or revenue derived from land which is situated in India and is used for agricultural purposes. Similarly, clause (b) speaks about income derived from a land situated in India and which is used for agricultural purposes of agriculture or any other work specified in items (ii) and (iii) of this clause. Clause (c) is not applicable in this case. A plain reading of this section makes it clear that all that is necessary that revenue should be derived from a land situated in India and which is used for agricultural purposes. This section does not specify that revenue has to be derived by the owner of the agricultural land only. Revenue therefore implies some yield or some income from: agricultural operations. Sub-clause (ii) and (iii) also use the terms cultivator and receiver of rent-in-kind . These terms also appear in Clause (c) of section 2(1A). Thus, it can be inferred that agricultural inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d was agricultural income. In this regard the stand of the assessee has been that land in question was received by it from Maharashtra State Farming Corporation for joint cultivation to grow and produce sugarcane. Assessee also placed on record before authorities below the copy of the agreement executed for joint cultivation with Maharashtra State Farming Corporation. Thus there was no denying the fact that sugarcane was cultivated on the land owned by MSFC Ltd., and also the basic agricultural activity in the form of preparation of land for cultivation, ensuring water supply, plantation of seeds, tending of saplings of sugarcane, spraying of insecticides and pesticides, manuring etc., was carried out in respect of sugarcane by the partners of the firm. It was clear stand of the assessee before the Assessing Officer that since land was owned by MSFC Ltd., it was not reflected in the Balance Sheet. The Assessing Officer was not justified in rejecting this argument. At the same time Assessing Officer has not doubted the cultivation of sugarcane on the agricultural land in question. In this situation, the Assessing Officer was not justified in holding that income of assessee is not in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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